Ride-sharing company Uber did not exist in 2008. In 2015, it earned a reported $1.5 billion in revenue. Airbnb, the online home-sharing marketplace founded in 2008, lists rentals in 34,000 cities. Smartphone applications enable people to make money giving rides, renting their homes, and even their personal possessions. However, their insurance may not protect them when something goes wrong.
Those who drive for Uber and other transportation network companies may be doing so without insurance to cover them for injuries or damages they cause to others. Most auto insurance policies do not apply when the insured person is using a vehicle to give others rides for a fee (other than in traditional carpools.) While Uber, Lyft and other companies provide some liability insurance, that coverage might not apply before a passenger enters the vehicle.
If you are driving for one of these services, check to find out whether they insure you during your trips, how much insurance they provide, and what the terms and conditions are. Also, ask your insurance agent about policies that might cover you during the times when you are open for rides but before you pick up a passenger.
If you are the person purchasing the ride, find out ahead of time whether the company provides insurance for injuries to passengers and how much. If you live in a state with a “no-fault” insurance law, your own auto insurance policy may cover some of the costs of injuries you suffer during a ride. If your state has such a law and you get hurt in an accident, submit claims to both the driver’s insurer and your own.
Renting out a home or apartment via a service such as Airbnb may also leave the owner without coverage. Insurance companies have designed homeowners policies to insure homes for personal use. Renting out a home on more than an occasional basis may meet the policy’s definition of business use. Most policies provide very limited coverage for businesses run out of a home, if they provide any at all. This could leave you uninsured if your renters damage your property or get hurt during their stay. Check with your insurance agent to find out what your current policy does and does not cover. You may need to buy additional insurance to cover a home-based business. The home-sharing service may also offer some insurance.
If you are the person paying to stay there, your insurance may cover you if you damage the landlord’s property, but only for a few causes of loss. For example, you may have coverage if you cause fire, smoke or explosion damage, but not if you break a window or overflow a bathtub. Read the rental agreement, find out what you may be responsible for, and discuss coverage options with your insurance agent.
Smartphone technology has rapidly opened up new avenues for people to offer services for income and for others to purchase those services. All new opportunities come with risks. Make sure that you are properly protected against them.